Egypt (Cairo) - Capital Intelligence (CI) announced today that it has affirmed Export Development Bank of Egypt's (EDBE) Financial Strength Rating of BBB-, its Support Rating of 2 as well as the Bank's Foreign Currency Long-Term and Short-Term Ratings of BBB- and A3, respectively. The Outlook on all ratings is Stable, reports Global Arab Network according to a press statement.

The Bank's ratings are underpinned by the support that EDBE has received from its shareholders who have subscribed to capital increases, its improved capital adequacy in the current year, good access to medium-long term funds from local and international financial institutions and its strong business franchise as the country's official export finance bank. However asset quality, which had been improving for a number of years has weakened in the current year leading to an increase in the non-performing loan (NPL)/gross loans ratio and a fall in loan loss reserve coverage despite stepped up provisioning.

CI notes that if the reversal in asset quality is not quickly brought under control this may place downward pressure on the Financial Strength Rating over the near term. The Bank's ratings are also constrained by a certain degree of borrower and issuer concentration, volatile returns on the Bank's equity and corporate bond investment book and by EDBE's below average liquidity. The Bank has deployed part of its liquidity to take direct and indirect equity participations in Egyptian firms, to invest in corporate bonds and subscribe to private equity funds.

EDBE commenced operations in early 1985 as the official export financing arm of the Egyptian government. The majority of the Bank's share capital is held by state owned entities namely National Investment Bank, National Bank of Egypt and Banque Misr. The Bank is active in short term pre and post-shipment export finance and provides longer term export finance under official export credit guarantee programs and bilateral agreements with other Export Credit Agencies. EDBE is also the majority shareholder of independently run Export Credit Guarantee Co of Egypt (ECGE), which provides political and commercial risk insurance to Egyptian banks and exporters under a protocol with the Egyptian state.

Other than its specialised export finance function, EDBE has also developed commercial banking and retail business through its network of 15 branches. This has enabled it to build quite a good customer deposit base, complementing its good access to official medium term funds and strong international correspondent bank network.

Global Arab Network